Re: What's the story on tax returns this year?

Lenl wrote-I'm 74 yrs old and retired. Had the same income in 2018 as i did in 2017 and paid about $1400.00 less in Federal Income tax. So Thank you Donald Trump for the new tax changes.-------------------------------------------------------------------------------------------------------------------------------------------------Had about a $1000.00 increase in income but paid $200.00 less in income tax than in 2017. I think most of those complaining about getting less in refund are people who received more on their regular pay during the course of the year.

Re: What's the story on tax returns this year?

I am sure that your property taxes and state taxes are high in California.

Actually, Gail, property taxes in California are typically lower than in most other states. By law, house property taxes are limited to 1% of the purchase price of the home minus $7000. So tax on a $1 Million purchase price home is $9,930 per year to start and increase by the lesser of the CPI-W inflation rate or 2% per year of the previous year tax. So a $1 Million house purchased last year would be $10,129 for this year. That keeps it comparatively low to other states. Example, a house purchased in 1983 for $100,000 had property taxes of $993, and today when the house is worth $600,000 or more, the tax for that original purchaser is now about $1500. If they sell the house, the new owner will pay $5930 or more in property taxes.

Where Californians get nailed is on state income taxes. The 9.3% marginal tax rate kicks in at taxable income over $56,085/$112,170 single/married. So a couple doesn't have to make much, by California standards, to pay a lot in state income tax. It's a 6% marginal rate for a $32K/$64K taxable income. The highest is 12.3% plus an extra 1% special tax for those over $573K single.

Although not retired last year, my fed taxes went down by 18% for the same income level as 2017. My 2018 withholding (same amount as 2017) was within $1000 of my 2018 taxes due. I'm afraid to see what my state taxes look like. Yes, I'm in California.

Re: What's the story on tax returns this year?

@JimMorgan wrote:I've been retired for about 20 years and YES I did have to pay taxes for the first time this year. I live in California and we have higher local taxes and higher mortgage interest that people in other parts of the country.

I am sure that your property taxes and state taxes are high in California. States differ. Just be glad that the Feds let any of them be deductible at all. There are many taxes that aren't deductible at all.

Mortgage interest rate - is based on your own specifics - credit worthiness, down payment when last you bought or refinanced your home and the prevailing rate at the time that you got the mortgage- the whatever interest amount is based on the price of your home which is financed with the mortgage.

The later (mortgage interest) you can control directly - refinance to a lower rate or pay down the mortgage.

To a certain extent your property taxes and your state taxes are also controlled by you since those are both under more localized control in your locality and state of which you are a resident.

Re: What's the story on tax returns this year?

I've been retired for about 20 years and YES I did have to pay taxes for the first time this year. I live in California and we have higher local taxes and higher mortgage interest that people in other parts of the country.

Re: What's the story on tax returns this year?

I'm retired and in previous years my deductions and exemptions (between $28,000 to $30,000) kept me from paying any federal or state income taxes. This year the $26,000 standard deduction is supposed to consider both personal deductions and exemptions. So for the first time in many years, I now have to pay both fed and state income taxes. Was told by a tax assistant that the new laws don't really hurt anyone as they haven't really changed. For an old retired enrolled agent for the IRS - don't feed me an balony!

Re: What's the story on tax returns this year?

Since most retired people would be making estimated tax payments rather than tax withholding, they should have been making payments that would amounted to their previous years total tax liability. Assuming they did not have substantial deductible taxes in previous years, they would most likely have a lower tax liability in the current year and would therefore see a lower tax liability and probable refund. Those individuals who used itemized deductions in the past with exceptionally high deductible taxes that are now limited to $10,000 in total and with other medical and/or charitable deductions could actually see a higher tax liability this year since the standard deduction and over 65 deductions could be less tax deductions that previous years.

Re: What's the story on tax returns this year?

I am retired, and I always have to pay taxes (I do have money taken off from my pension, and annuities), but apparently not enough, but I feel I need the money I do get (covers rent increases etc). This year I had a change on one annuity which meant I had to get a check from that company as I was moving the money to a new one. I had federal tax taken off of the earnings. I pretty much wound up paying the same amount as previously, not much more. I don't live on a large sum of money because I am still pretty young and need to keep my investments as who knows how long I may still live. I don't live high but can still enjoy eating out and buying books.